I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

EDIT: Virgin Mobile has $35 a month (used to be $25) for 300 minutes, unlimited text, and 2.5GB of unthrottled (but slower) 3G data. Even if you're sharing a plan, that's still 20+ dollar saved per person every month.

Well, clearly the subsidies are an enormous, back-breaking problem for the wireless industry. As you can see, Verizon's profit margin dropped an astonishing 0.8 percent. Barely clinging to life with a 41+ percent margin, their only hope may be a massive government bailout.

I will say my prayers for the fine folks of Verizon, scraping by while other industries bathe in largess. It's simply not fair.

EDIT: I followed the link and read further. Forced to spend $135M of corporate capital, on sales of $30 billion! MON DIEU, WHERE IS JUSTICE?

I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

But does it exist outside the city as you travel or visit smaller towns. This is their strength, coverage and no roaming (pre pays have various plans).

I thought many of the prepaid carriers lease spectrum from Verizon or AT&T, so effectively they mostly enjoy the same coverage? They won't give them access to their 4G network however, as in the case of StraightTalk running on AT&T towers but not having 4G yet.

On a side note: The article is exactly why I'll never get into a contract again. Your monthly bill is effectively paying for the subsidies on not just your phone, but other people's too in case you got a cheap device.

It would be nice to know why analysts think phone subsidies are a drain on profits, because it appears like kind of a goofy argument at first glance. Yes, Verizon has phone subsidies and T-mobile doesn't...but T-mobile is also massively cheaper (for a particular plan) according to the linked article. Maybe I'm reading too much into it, but it sort of sounds like the analysts are thinking "Verizon could increase profits if they got rid of subsidies and kept their plan prices exactly the same"...which doesn't sound like it will work to me.

Personally I'd be surprised if phone subsidies weren't cost effective for the carriers. It seems like people take a lot more notice of immediate costs than costs over time. So it seems like a carrier could make more money with cheaper phones but more expensive plans than the other way around.

I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

I won't speak for anyone but myself but I split a shared plan with my gf for about $75/month each. I haven't found a prepaid option that offers (true) unlimited data as well as a lower total cost when combined with the unsubsidized handset price.

I have no problem spending $600 on a high end smart phone that I will use for ~2 years but if the monthly plans/rates are not good enough, then there isn't a lot of advantage to me. The $800 subsidy on two smartphones works out to just over $33/month over a normal 2-year contract so my $150/month bill is closer to $115 when ignoring the subsidy. I can probably find several prepaid options that cost under that $58/month per phone but they aren't all that much less than that. Add in the throttling, caps, and other restrictions and at least for now, it's not really worth it for us each to save maybe $5 per month.

Like I said...my experience only. For a different user it might be a much bigger difference but that's why "anybody" might be willing to pay $75/month when prepaid options exist.

I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

As much as I hate to admit it, you get what you pay for when it comes to wireless service in the USA. I recently switched to Verizon after staying away from them for many years because they have undeniably the best voice and data coverage in the country. Sure, there are cheaper plans available, but you'll have to be prepared to make compromises in terms of speed / coverage and if you use your phone a lot throughout the day you'll end up paying for it in other ways.

Personally I'd be surprised if phone subsidies weren't cost effective for the carriers. It seems like people take a lot more notice of immediate costs than costs over time. So it seems like a carrier could make more money with cheaper phones but more expensive plans than the other way around.

Man is this a sad but true statement. "Monthly payments of only $189" for a car, but they skip over the part where they are paying it for 10 years for a car that would cost $12k if bought outright. Same deal with all the balloon mortgages. Too few people look at the total cost of ownership. If your popular choice of cell phone instead of saying $99, plus $90 a month for 2 years, said phone plus 2 year agreement is $2259, or you can have this phone for $1500, I wonder how many people would make different choices? Perpetual debt aka rent to own, and by the time it's owned it's time to get a new one...

Yes, Verizon has phone subsidies and T-mobile doesn't...but T-mobile is also massively cheaper (for a particular plan) according to the linked article.

I had thought I'd go with T-Mobile (switching from Sprint), but I didn't find it's any cheaper if you have more than one phone. I'm paying about $160 for two Android smartphones and one flip-phone. According to the rep I spoke with, T-Mobile's non-subsidized plan is slightly north of $50 per phone, so it doesn't really save me anything, AND I lose both the subsidy and the true unlimited data.

All this "T-Mobile is cheaper" talk seems to only refer to a plan for a single phone (as alluded to by rainsford above). Is that accurate or am I missing something?

I thought many of the prepaid carriers lease spectrum from Verizon or AT&T, so effectively they mostly enjoy the same coverage? They won't give them access to their 4G network however, as in the case of StraightTalk running on AT&T towers but not having 4G yet.

The MVNO's using ATT do. VZW only has one (and it's device selection is horrible). AFAIK none of the Sprint based MVNO's have access to VZW's data network (at all, not even 2g data); although it's finally letting them buy access to voice coverage. I've no idea what ATT is offering to TMobile MVNOs.

And this is precisely why I dumped Verizon two years ago and went to prepaid. I don't have an iPhone, I don't want an iPhone, and I got tired of watching my bills go up while my services went down in order to cover the losses from Verizon subsidizing other people's iPhones. I also got tired of how when my two year contract was up my bill did not drop to reflect the fact that my phone was no longer subsidized.

I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

I won't speak for anyone but myself but I split a shared plan with my gf for about $75/month each. I haven't found a prepaid option that offers (true) unlimited data as well as a lower total cost when combined with the unsubsidized handset price.

I have no problem spending $600 on a high end smart phone that I will use for ~2 years but if the monthly plans/rates are not good enough, then there isn't a lot of advantage to me. The $800 subsidy on two smartphones works out to just over $33/month over a normal 2-year contract so my $150/month bill is closer to $115 when ignoring the subsidy. I can probably find several prepaid options that cost under that $58/month per phone but they aren't all that much less than that. Add in the throttling, caps, and other restrictions and at least for now, it's not really worth it for us each to save maybe $5 per month.

Like I said...my experience only. For a different user it might be a much bigger difference but that's why "anybody" might be willing to pay $75/month when prepaid options exist.

This.

I've looked around, and haven't been able to find any pre-paid plan that saves me more than 10 bucks a month or so. For that $10/month, I have to give up something -- either good customer service, 4G speeds, device selection, or coverage. Hardly seems worth it.

I currently split a verizon plan 4 ways (me, my wife, my brother and his wife), so our cost per month is about $65 each. I don't know why more people don't do it that way. The more lines you have on a plan, the lower the cost for each line. This continues to be the the case with the new share everything plans, assuming you go with 2GB per line, which works out fine for all of us.

Verizon’s corporate leaders and investors feel the same way, as it was forced to spend $135 million of corporate capital as a result of the storm’s recovery efforts, and was hit with a “7-cent-per-share impact due to Superstorm Sandy.”

Wait, Verizon doesn't expect to have to pay for repairs on its own network?

Are there any MVNO's that rely on Verizon's network? Just wondering as the V network is what I care about so much because Sprint's and ATT's network aren't at the same level of reliability for calling (in the areas of interest to me).

Also, everyone pushes MVNO, but whenever I do the math, I don't seem to come out ahead until years in the future assuming I keep a phone for 3+ years. Since I have to include the extra $450 in my plan cost ($650 outright vs. $199.99 w/ contract). If I do that over 2 years, that is an extra ~$20/month over a major carrier which wipes out a lot of the savings.

That doesn't even take into account that a lot of the major companies have deals with the major carriers to get ~20% off the monthly bills.

Am I missing something? Only referring to the US market. I'm not familiar with the foreign markets as I know they are way different.

For those on contract plans that calculate their costs to around $50 per month per phone I will like to know how you managed to get that to work. I was on a family plan on ATT with my wife. Total came to $165 a month even with 20% corporate discount.

Breakdown was $80 for 1400 minutes. $30 for unlimited text. $30 for second smartphone. Add in BS fees and something I am probably forgetting. We are now both on TMobile Prepaid. I have an LTE phone that is not supported by TMobile so I get HSPA+ speeds. Even then, that is faster than the LTE I was getting on ATT. We now pay $80 for both phones for unlimited text, (unlimited minutes for her, 100 for me), unlimited data (up to 5GB at 4G speeds for me, 2GB for her). So we are saving over $900 per year. We could buy a new iphone and nexus (if available ) every year and still come out ahead. I willingly gave up grandfathered unlimited and swallowed $500 in ETF for that. I could not find anything remotely close on any of the contract plans.

For those on contract plans that calculate their costs to around $50 per month per phone I will like to know how you managed to get that to work. I was on a family plan on ATT with my wife. Total came to $165 a month even with 20% corporate discount.

$60 national plan for two lines$25 data plan per iPhone (x3 = $75)$10 per month for third iPhone

Sum total ignoring BS fees is $145 a month.

Quote:

Breakdown was $80 for 1400 minutes. $30 for unlimited text. $30 for second smartphone.

We use iMessage, which gives us unlimited messages and saves $30.

Quote:

Add in BS fees and something I am probably forgetting. We are now both on TMobile Prepaid. I have an LTE phone that is not supported by TMobile so I get HSPA+ speeds. Even then, that is faster than the LTE I was getting on ATT.

We don't use voice enough to pay $80 for 1400 minutes.

Quote:

We now pay $80 for both phones for unlimited text, (unlimited minutes for her, 100 for me), unlimited data (up to 5GB at 4G speeds for me, 2GB for her). So we are saving over $900 per year. We could buy a new iphone and nexus (if available ) every year and still come out ahead. I willingly gave up grandfathered unlimited and swallowed $500 in ETF for that. I could not find anything remotely close on any of the contract plans.

So it sounds like your wife and you have different use patterns that meant you were oversubscribing for both of you on the AT&T family plan. In my situation we only use 350 average minutes a month on 3 iPhones and 3gb total (so I have 2gb and the other two iPhones have 300mb), which works out for us.

Wait, Verizon doesn't expect to have to pay for repairs on its own network?

A more accurate assessment might be to say that Verizon doesn't expect anyone to blame them for the costs of repairing its cheap network. Seems to me, there are almost certainly a myriad of slightly more expensive deployment methods which would have been more resilient in the face of storms like Sandy -- and which would have paid for themselves after successfully weathering just one such storm -- but just like any other bean-counter driven organization, Verizon basically went with the cheapest option they could find.

(But then, maybe I'm totally wrong here... after all, what do I know? I'm just yet another cynical customer who is getting tired of paying duopoly-inflated prices for his fricking cell phone...)

I spend less then 20$ with T-Mobile a month. I have pay as you go $2/day plan (unlimited data, voice and text at 2G speeds though ). However, I only use my smartphone only for the emergencies. Everything else gets handled by Google Voice.

I like it. As I hate being expected to be tethered to the phone every fcking single day 24/7.

... Total came to $165 a month even with 20% corporate discount. ... Breakdown was $80 for 1400 minutes. $30 for unlimited text. $30 for second smartphone.

We don't use voice enough to pay $80 for 1400 minutes. ...

So it sounds like your wife and you have different use patterns that meant you were oversubscribing for both of you on the AT&T family plan. ...

Interestingly enough, I'm a Verizon Wireless customer, and my costs and bundle almost exactly match Plasdom's former AT&T costs -- and like Plasdom, I have never once come anywhere near that 1400 minute "limit". The catch (at least in my case) is that the 1400 minute plan was the lowest tier at which Verizon allowed me to bundle that $30 unlimited data plan.

So "oversubscribed" or not... that was simply the lowest price which got me what I wanted.

Only a few more months, though, and then I can move back to Sprint without any ETFs. I've done the math and requisite research before: T-Mobile doesn't have quite enough coverage of my area to satisfy my needs, which means that Sprint is the least expensive option which can give me decent coverage. As such, I'm afraid that the ETF does not pay for itself, in my case.

For those on contract plans that calculate their costs to around $50 per month per phone I will like to know how you managed to get that to work.

I think for the family plan to get costs lower (~$50 to $60 per line) one needs at least three to four lines and also use fewer services.

in my previous post I was doing this from memory and made a mistake with my calculations. I went to the AT&T site.For two iPhones/smartphones the cost per month for 700 minutes voice and 3 GB of data equals $130 per month. (My wife uses a free non AT&T texting service.)This is $65 per line.* My third line is for a standard phone for my son which is only $10 per month = $140 per month.My son is thinking of getting an iPhone. If he did, that would be $30 per month more for a total of $170 per month.The price per line would then be $57.

Adding a fourth person would be $40 more ($10 voice, $30 data) = $210 per month = $52.5 per line.

Verizon’s corporate leaders and investors feel the same way, as it was forced to spend $135 million of corporate capital as a result of the storm’s recovery efforts, and was hit with a “7-cent-per-share impact due to Superstorm Sandy.”

Wait, Verizon doesn't expect to have to pay for repairs on its own network?

No, normal repair costs were expected; but the damage from Sandy was well above normal storm damage rates.

Are there any MVNO's that rely on Verizon's network? Just wondering as the V network is what I care about so much because Sprint's and ATT's network aren't at the same level of reliability for calling (in the areas of interest to me).

Just one, and their smartphone selection is abysmal. If you only care about voice coverage VZW roaming is available on at least some Sprint MVNO's; but AFAIK none have any roaming data access yet.

It would be nice to know why analysts think phone subsidies are a drain on profits, because it appears like kind of a goofy argument at first glance.

I can answer that. It's because "analysts", at least the ones that have a public face, are clueless whores who will say whatever anyone tells them to say.

The dynamic in this case is that (a) VZW is well aware that it is doing great BUT

(b) VZW doesn't want the public or government asking questions about how come they are doing quite so well, SO

(c) it is in VZW's interests,year after year, to trot out this sob story of how subsidies are killing them (and they only keep on using them because, gosh darn it, they love the American people and will give them what the people want, no matter how much it hurts VZW as a company).

Are there any MVNO's that rely on Verizon's network? Just wondering as the V network is what I care about so much because Sprint's and ATT's network aren't at the same level of reliability for calling (in the areas of interest to me).

Just one, and their smartphone selection is abysmal. If you only care about voice coverage VZW roaming is available on at least some Sprint MVNO's; but AFAIK none have any roaming data access yet.

I don't know why anybody would be willing to pay $70+ a month when much cheaper prepaid alternative exist.

I used to use one of those prepaid services until i got fed up with the crappy data service. While i still lived in NYC I was using Boost. I was on their unlimited data plan. Well I started noticing that I wasn't getting any data service when I wasn't at home or at work. I found i had been using my home and work WiFi since I for who knows how long. I called their support people and found out their data service in NYC was down and they were working on it. Three months later still no data and i was still getting charged for it when they assured me I would be refunded the data portion of the plan. I finally said screw them and went to sprint. I am paying double now for the same package I had on Boost but better service and reliability. I'm paying $101 a month for unlimited data and unlimited mobile to mobile calling.

It's worth noting that yes, Verizon's margins are down to 41.4% due to a massive outlay of subsidies this quarter, but Verizon also expect margins to rise to 50% over the next year, as they collect fees from all of the new customers they signed up this quarter.